Economic Stabilisation Fund to Shield India from Global Headwinds, Says Finance Minister
Union Finance Minister Nirmala Sitharaman has announced the establishment of an Economic Stabilisation Fund valued at Rs 57,381.84 crore. This strategic initiative is designed to fortify the Indian economy against external shocks, including ongoing geopolitical tensions such as the crisis in West Asia.
Supplementary Demands for Grants Approved by Lok Sabha
Presenting the second batch of supplementary demands for grants for the fiscal year 2025-26 in the Lok Sabha, Sitharaman emphasized that the fund will provide crucial fiscal flexibility. "The Economic Stabilisation Fund will give fiscal headroom to allow India to respond to global headwinds," she stated during the parliamentary session.
The Finance Minister proposed a gross expenditure of approximately Rs 2.81 lakh crore, which includes:
- Cash supplements amounting to Rs 2.01 lakh crore across 18 grants.
- Technical supplements of Rs 0.80 lakh crore for 32 grants.
Following a detailed discussion, the Lok Sabha passed these demands on Friday, authorizing the government to spend an additional Rs 2.01 lakh crore in the current fiscal year.
Key Allocations and Fiscal Commitments
The supplementary demands focus on enhancing national defence and boosting social security through initiatives like VB-G RAM-G. Significant allocations include:
- Defence Services (Revenue): Rs 41,430.48 crore earmarked for the Armed Forces.
- Rural Employment: An additional Rs 30,000 crore allocated for VB-G RAM-G, supplementing the initial Rs 95,000 crore, with Sitharaman affirming, "Our commitments for MGNREGA-VB-G-RAM G are being fulfilled."
Sitharaman clarified that the proposal also involves Rs 902 crore for recouping advances from the Contingency Fund of India, ensuring transparent financial management.
Government's Fiscal Strategy and Reassurances
Addressing concerns about budget control, the Finance Minister defended the supplementary demands as a reflection of a flexible and responsive governance approach. She noted that the government has limited such demands to a "bare minimum" of two per year, avoiding excessive fiscal adjustments.
Sitharaman reassured Parliament that these expenditures will not compromise fiscal discipline. "In no way will we fall short of the budget's commitment. I want to reaffirm that the promises made in this House will stay within the fiscal deficit target that was presented in Parliament on February 1, 2026," she asserted.
This move underscores the government's proactive stance in navigating global economic uncertainties while maintaining robust fiscal targets and supporting critical sectors like defence and rural development.
